Pound Sterling to Euro (GBP/EUR) Exchange Rate Recovers after Minutes Show Division
The Pound Sterling to Euro (GBP/EUR) exchange rate recouped all of its recent losses during the European session as UK inflation fears were eased somewhat.
Given the mixed nature of recent UK economic reports, some investors had expected the Bank of England’s (BoE) meeting minutes to be dovish in tone.
While the minutes weren’t exactly cheery and did highlight a lot of the headwinds facing the UK economy at the present time, they also showed that some policy makers believe inflationary pressures could build as the level of slack reduces.
Last week’s Quarterly Inflation Report raised disinflationary concerns, but these fears were alleviated slightly by the minutes and the Pound gained across the board.
Earlier…
GBP/EUR Exchange Rate Forecast to Fluctuate after BoE Minutes
Prior to the publication of the Bank of England (BoE) meeting minutes, the Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.2450, having fallen below 1.25 following the publication of UK CPI and Eurozone confidence data.
While the tone of the minutes will be responsible for much of the GBP/EUR pairing’s movement today, investors will also be focusing on the Eurozone’s Current Account and Construction Output figures.
Positive ecostats from the currency bloc would be Euro supportive and could prompt the Pound to test fresh lows against its European counterpart.
Earlier…
GBP/EUR Exchange Rate Falls after Inflation Gain
The Pound Sterling to Euro (GBP/EUR) exchange rate slid below 1.25 during the European session as the pace of UK inflation increased unexpectedly.
The Euro was also bolstered by surprisingly strong economic sentiment data for the Eurozone and its largest economy. ZEW President Professor Clemens Fuest said of the report; ‘ZEW’s Indicator of Economic Sentiment for Germany has increased for the first time in 2014. The recent growth figures for the Euro area suggest that the economy is stabilising, which contributed to the indicator’s increase. However, the economic environment remains fragile, not least due to ongoing geopolitical tensions.’
The GBP/EUR weakness persisted as the day progressed and investors are betting that the pairing could fall to fresh lows tomorrow after the Bank of England (BoE) publishes the minutes from its latest policy meeting.
The minutes may show that the Monetary Policy Committee remained divided on the subject of interest rate increases, but if the two members of the MPC who voted in favour of immediate interest rate increases at the last three meetings have retracted their votes, it could trigger extensive Pound declines.
Pound Sterling Struggling before CPI
Prior to the release of the UK’s Consumer Price Index, the Pound Sterling to Euro (GBP/EUR) exchange rate was trending in the region of 1.2531, down -0.2% on the day’s opening levels.
Inflation is expected to come in at 1.2% on an annual basis after advancing by 0.1% on the month in October.
A soft print would support the argument in favour of the Bank of England (BoE) leaving interest rates on hold until towards the end of next year and could undermine demand for the Pound.
If the German ZEW economic sentiment survey shows the improvement expected it is highly probable that the GBP/EUR exchange rate will fall below 1.25 and trend around that level for the rest of the European session.
Earlier…
Pound Sterling to Euro Exchange Rate Recovers Ground on Draghi’s Comments
The Pound Sterling to Euro (GBP/EUR) exchange rate was able to advance to the mid 1.25 level before the close of trade on Monday as the Euro softened in response to comments issued by European Central Bank (ECB) President Mario Draghi.
Draghi asserted that the lack of notable growth in the Eurozone may force the ECB to introduce additional stimulus in the form of purchasing government bonds.
Forex strategist Mark McCormick said of Draghi’s comments; ‘What Draghi said has really been that they’re doing what they can to try to ease the credit cycle and try to support the economy. The market just really wants to continue to sell the Euro. To me though, it’s starting to look a little bit overdone.’
Whether the GBP/EUR exchange rate manages to hold gains in the wake of the publication of the UK’s Consumer Price Index remains to be seen.
Earlier…
GBP/EUR Extends Declines
The Pound Sterling to Euro (GBP/EUR) exchange rate extended losses on Monday and the GBP/USD exchange rate fell for a fourth day after two prominent members of the Bank of England (BoE) expressed inflation concerns.
Governor Mark Carney and chief economist Andy Haldane both envisage inflation running below the central bank’s 2% target for the foreseeable future.
According to currency strategist Jane Foley; ‘The market is building up short Sterling positions inspired by a dovish reading on the Inflation Report. Carney and Haldane have made it clear they are focused on disinflationary risks.’
The GBP/EUR exchange rate fell to a low of 1.2492 on Monday.
The pairing did manage to recover before the close of the session but tomorrow’s UK CPI will be crucial when it comes to determining the direction the GBP/EUR exchange rate will take as the week continues.
Earlier…
Pound Sterling to Euro Exchange Rate Steady after Trade Stats
The Pound Sterling to Euro (GBP/EUR) exchange rate was trending in a narrow range as the European session continued in spite of data showing that the Eurozone’s trade surplus almost doubled in September.
According to Reuters; ‘The European Union statistics office said that the unadjusted external trade surplus of the 18 countries sharing the Euro rose to 18.5 billion Euros in September from 10.8 billion a year earlier and a revised 8.6 billion in August. The better result was mainly thanks to a 9% year-on-year jump in exports against only a 4% increase in imports’.
While the report was positive, concerns that the Eurozone is on the brink of recession limited Euro gains.
Today’s speech from European Central Bank President Mario Draghi could cause more notable movement in the GBP/EUR exchange rate.
Earlier….
GBP/EUR Trending Lower, Eurozone Trade Data Ahead
On Monday the Pound Sterling to Euro (GBP/EUR) exchange rate was trading in the region of 1.2511.
Last week the Pound fell dramatically against the Euro, dropping by the most for 20 months, as the Bank of England’s (BoE) dovish inflation report pushed rate hike bets right back to the end of next year.
The British currency was also feeling the heat following the publication of disappointing UK Construction Output data on Friday.
Over the weekend UK Prime Minister David Cameron added fuel to the fire when he stated that the Eurozone is on the verge of recession and that weakness in the currency bloc is undermining growth in the UK.
He also highlighted the risks posed by the Ebola crisis, uncertainty in the Middle East and slowing expansion in emerging market economies.
Cameron stated; ‘As I met world leaders at the G20 in Brisbane, the problems were plain to see. The Eurozone is teetering on the brink of a possible third recession […] Emerging markets, which were the driver of growth in the early stages of the recovery, are now slowing down. [It is] clearer than ever how vital it is that we stick to our long-term plan at home’.
UK House Prices Fall, Pound Sterling Exchange Rate Softer
Demand for the Pound was also undermined on Monday as UK house price data showed a decline in property values.
The Rightmove House Price report registered a loss of -1.7% in November, month-on-month, following growth of 2.6% in October.
House prices were up 8.5% on the year following an annual figure of 7.6% the previous month.
GBP/EUR Exchange Rate Volatility Forecast
If today’s Eurozone trade balance data shows that the nation’s trade surplus expanded in September the GBP/EUR exchange rate could extend declines.
A speech to be given by European Central Bank (ECB) President Mario Draghi later today could also have a notable impact on the Pound Sterling to Euro (GBP/EUR) exchange rate in the hours ahead.
Investors will also be looking ahead to tomorrow’s UK Consumer Price Index.
If the rate of inflation is shown to have slowed, the GBP/EUR exchange rate could fall below 1.25 as the week continues.
Pound Sterling (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.5632,
Pound Sterling,,Euro,1.2514,
Pound Sterling,,Australian Dollar,1.7871,
Pound Sterling,,New Zealand Dollar,1.9710,
US Dollar,,Pound Sterling,0.6395,
Euro,,Pound Sterling,0.7989,
Australian Dollar,,Pound Sterling,0.5591,
New Zealand Dollar,,Pound Sterling,0.5068,
[/table]
